Case Study: Treadway Tire Company 1

Case Study: Treadway Tire Company

Case Study: Treadway Tire Company S. LaDuew GB520: Strategic Human Resource Management

Case Study: Treadway Tire Company 2 Treadway Tire Company When Ashley Wall had just finished attending a meeting at work, the plant manager Brandon Bellingham stated “we have a serious problem” (Skinner & Beckham, 2008, p.1). Wall had just presented the figures for the plants projected turnover rates for foremen the year ending in 2007. Bellingham was not happy because they had 50 foremen at their Lima Plant and in 2007 23 of those positions were turned over. When the Treadway plant closed in Greenville, South Carolina in 2006 Ashley Wall was transferred to the plant in Lima where her position was going to be the Director of Human Resources, since she already had over 10 years of work experience in the Human Resource department with Treadway Company. Wall had decided to make it her top priority to do what she could to reduce the foremen turnover rate at the Lima Plant since it had the highest foremen turnover rate out of all of the other Treadway plants in their division. Wall planned to do a complete thorough analysis to get to the bottom of the problem and find a way to correct the problem during the time that the plant will be closed down. The plant closes down for their annual maintenance and retooling between Christmas and New Year’s. Wall wanted to have this plan ready for action when they reopened in January of 2008 in order to fix this problem (Skinner & Beckham, 2008). In North America, there are nearly 9,000 employees who are paid hourly and/ receive salary pay by The Treadway Tire Company. The Treadway Company supplied tires to replacement tire markets and to the original manufacturers of equipment such as: General Motors, Chrysler, and Ford. They would sell Treadway Performance, Treadway Primo, and private brand tires (Skinner & Beckham, 2008). Case Study: Treadway Tire Company 3 Fifty-five percent of the production cost of producing a tire is for the cost of raw materials and an important ingredient to make the tires were petroleum derivates. “Raw material costs were highly dependent on the price of oil” (Skinner & Beckham, 2008, p. 1), from September 2003 to October 2007 Standard crude oil prices rose from $25 to $92 per barrel, causing pressure to be added to the economics of the tire companies (Skinner & Beckham, 2008). Wall was completely aware of the impact that the raw material s rising costs were having on the company. She would be able to help the situation by being able to improve productivity and cutting the overall costs at the plant if she could get the turnover rate reduced. This would not directly solve the problem but it would help the problem. Wall knew that the turnover was just the tip of the iceberg within the line –foremen segment, since there were some serious morale issues that were causing the entire plant to be affected by the dissatisfaction of employees. Wall thought for a long time about the factors of the problems and what could be done to correct them (Skinner & Beckham, 2008). The Lima tire plant in Lima, Ohio produced approximately 25,000 light trucks and passenger tires per day in 2007. The building where the plant is located sits on 128 acres of land, and is over 1.5 million square feet. The Lima plant employs 150 employees who receive salary pay, and 970 employees who are paid hourly. The United Steelworkers (USW) and the United Rubber Workers merged in 1995, and the United Steelworkers unionized the hourly personnel at the Lima plant. Rate pay, health/safety standards, job classifications, benefits, grievance procedures for the workers who are paid hourly, overtime rates, and pay increases were dictated by the union contract (Skinner & Beckham, 2008). Case Study: Treadway Tire Company 4 In 2000, the plant in Lima, Ohio was modernized and expanded, in order for the plant to be able to have their capacity increased and for the new manufacturing technology to be utilized. These changes to the plant had cost The Treadway Company $100 million. The changes Treadway made at the Lima plant with updated technology spending and equipment led to the Lima plant becoming one of the top Treadway plants in ratings for productivity and quality. Wall believes that Lima could become the number one Treadway plant in North America for productivity and also the top plant who is the lowest cost producer, when she is able to solve the turnover problem (Skinner & Beckham, 2008). The Lima plant started staying open 24 hours a day, seven days a week with employees working 12 hour shifts. They had four rotating shifts with their work hours being either 7:00 a.m. – 7:00 p.m. or 7:00 p.m. – 7:00 a.m. The employees would get a half hour lunch break and two breaks throughout their shift. The substantial fixed costs that are from running the tire plant are being amortized over the plants maximum production volume due to Treadways continuous operations. The Lima plant was able to have a reduction in headcount by only running two 12 hour shifts instead of having three 8 hour shifts, which led to the plant having significant cost savings (Skinner & Beckham, 2008). The Treadway tire plants line foremen are salaried paid, floor-level, non-union managers who supervise the hourly paid line-production employees. The Lima plant has 50 line foremen and there are three general supervisors who were managing several of the line segments. There are five area managers at the Lima plant who are responsible for the general supervisors, the hourly tire production team, and the line-foremen in their sector. The plant manager Brandon Bellingham Case Study: Treadway Tire Company 5 had the responsibility of overseeing the entire plant (Skinner & Beckham, 2008).

References Skinner, C. W., & Beckham, H. (2008). The Treadway tire company: job dissatisfaction and high turnover at the Lima tire plant. Harvard Business Publishing Brief Cases.